Gold crossed the US$2,000 per ounce mark in early April and has remained near this level since then.
Investors now find themselves in a world where the yellow metal is near all-time highs and appears safe above the previously rare US$2,000 price level. Is gold too expensive to buy, or is US$2,000 a cheap price considering its future potential?
Read on to find out what strategies experts recommend when the price of gold rises above US$2,000.
Why is the price of gold increasing?
Shree Kargutkar, Managing Partner at Sprott (TSX:IBS,NYSE:SII), told Investing News Network (INN) that there is a psychological aspect when it comes to the US$2,000 mark that captivates the market.
He explained that the same thing happened when gold hit $1,000 more than a decade ago.
However, Greg Taylor, chief investment officer at Purpose Investments, pointed out that while US$2,000 is considered a “magic number” for investors in North America, the metal has already broken records in international currencies.
Taylor said the gold rush comes amid concerns about the overall health of financial markets.
“I think it’s sort of an inflation story,” he said, noting that part of the investment class is increasingly frustrated with the tactics used by central banks, such as excessive money printing and stimulus measures.
“But it also affects people who are wondering about the health of the financial system, and just about the amount of money printing and who are looking for assets that are not subject to the whims of central bankers,” he said. declared.
Should investors buy gold at US$2,000?
Investors are often told to buy low and sell high, but the current situation is tricky: Gold is near its highest price on record, but many market observers believe its run may not just getting started.
Joe Cavatoni, chief market strategist for the Americas at the World Gold Council, told INN that it is important for investors to take a strategic approach to gold. This can help alleviate the pressure of high prices.
“A high price may or may not be a barrier for someone making a strategic allocation to gold,” he explained. “The price point is important, but it’s also more important to know how (gold) will perform when things change in the future, and how will that add to your overall return portfolio .”
For his part, James Henry Anderson, senior market analyst at SD Bullion, said he recommends buy gold in installments. This dollar cost allocation approach is a way to avoid overspending at any given time. “Ultimately, you want to ease your way into it, but also not buy in such small volumes that you pay huge premiums,” he said.
He also encouraged investors to plan their bullion strategy from a long-term perspective. “If I were to simply take a fifth of my liquid net worth and turn it into bullion, I wouldn’t do it all at once, I’d do it in installments and take my time. I would do it in maybe five installments, say over a period of about six months,” he said.
Jeff Clark, metals and mining analyst at TheGoldAdvisor.com, said those buying gold as an investment should be clear about their strategy for the commodity and understand what role they want it to play in their portfolio. “You don’t buy it as an investment, hoping it goes up… you buy it as insurance, as portfolio protection” he said.
Likewise, Jordan Roy-Byrne, editor and publisher of TheDailyGold, told INN It is important for investors to be realistic: there is no room for dreaming of selling gold at the highest peak or launching at the very bottom.
“Even as a tactical person, you will never buy low or sell high,” he said. “No one can do that.”
How high will the price of gold rise in 2023?
Experts and investors view the rise in the price of gold as a potentially market-altering event, but there is no clear answer as to whether US$2,000 is truly the new reality for the metal or it is simply an incident in the grand scheme of things.
However, big price predictions are gaining momentum. “What if gold at US$2,000 is low? What if gold reached $2,500? What if it was $3,000? These levels are very possible this year,” Clark said.
Anderson told INN that he’s taking a five- to 10-year approach because during that time, “US$2,000 an ounce of gold will be considered US$250 an ounce of gold — that will be considered real value, not like a bad game.
For his part, Doug Casey of InternationalMan.com argued that when it comes to stability and long-term investments, gold will always trump foreign exchange risks, interest risks, default risks and others. stock market concerns.
“Stocks are still overvalued” he stated.
What investors should remember
As gold stabilizes above US$2,000, it’s clear that investors may need to adjust their ideas about what constitutes a high price.
With the yellow metal possibly poised for much greater progress, market participants will need to be prepared to position themselves advantageously in the new gold paradigm.
Don’t forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Bryan McGovern, have no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Investing News Network does not guarantee the accuracy or completeness of the information reported in the interviews it conducts. The views expressed in these interviews do not reflect the opinions of Investing News Network and do not constitute investment advice. All readers are encouraged to do their due diligence.
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